There have already been 41 announced U.S. deals worth an estimated $47.5 billion in November.  Those who stand to benefit from this trend are large Wall Street banks and some boutique financial firms, states Jessica Papini of The Wall Street Journal.

An increase to access to capital markets is what most think is driving the pickup in the M&A market. The industry suffered over the past year as a result of the financial crisis and the inability of firms to access the capital markets. (Click here for more on capital markets).

For more stories on financials, visit our financial category.

There will soon be two ETFs to play activity in corporate mergers and acquisitions.

IndexIQ will soon be launching the IQ ARB Merger Arbitrage ETF (NYSEArca: MNA), which tracks a basket of companies with publicly announced takeovers, says Benzinga. Merger arbitrage is purchasing stocks of targets for takeover for less than what the transaction price will be, then theoretically pocketing the difference.

This rebound in M&A could also benefit the SPDR KBW Capital Markets ETF (NYSEArca: KCE), which is up 40.7% year-to-date.  KCE holds stocks that stand to benefit from an increase in M&A activity, such as Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS); GS is 9.9% and MS is 8.1%.

Kevin Grewal contributed to this article.

The 10.2% unemployment figure is far worse than what economists had expected, and they don’t see any sign of relief until next year. While the pace of layoffs has slowed, the unemployment rate is continuing to climb, reports Javier C. Hernandez for The New York Times.

Unemployment isn’t just as issue here, either; millions around the world don’t expect to see relief in the form of jobs anytime soon. The European Union forecast unemployment in the eurozone to rise to 10.7% in 2010, up from 9.5% this year. Unemployment ranges from 3.5% in the Netherlands to 18.3% in Spain, reports Greg Keller for the Associated Press. In China, the official urban unemployment rate is 4.3% in the third quarter. Brazil’s unemployment was 8.1% in August, almost unchanged from the previous month.

Gold futures have soared to a record $1,100 an ounce today. While some profit-taking briefly sent gold lower, it resumed its course and analysts expect it to continue to move higher, reports Allen Sykora for The Wall Street Journal. SPDR Gold Shares (NYSEArca: GLD) is up about 0.4% year-to-date. (More on gold can be found here).

Businesses slashed inventories for a record 13th straight month in September, although sales rose for the sixth consecutive time. Many hope that improving sales figures will encourage businesses to start lifting production, although a rising jobless rate heightens fears that consumers won’t start spending anytime soon, reports Martin Crutsinger for the Associated Press. (An ETF to play holiday shopping).

The world’s largest insurer, AIG (NYSE: AIG) reported that it was profitable for the second consecutive quarter. Although things have stabilized, the company’s CEO said that earnings will remain choppy while they restructure.  SPDR KBW Insurance (NYSEArca: KIE) is up about 0.6% this morning.

G20 Finance Ministers are meeting this week to discuss financial reform and economic recovery. While these economies have put in place certain policies in order to push along a recovery, they’re not policies anyone wants to keep in place forever. The general consensus is that it’s too soon to reverse the measures, but it’s not too soon to begin talking about when and how it would happen. Government debt in developed G20 countries is likely to reach 118% of annual national income in 2014, reports Andrew Walker for the BBC.

For more stories on the global economy, visit our global ETF page.

September pending home sales jumped 6.1% as homebuyers rushed to take advantage of a government tax credit. The $8,000 credit for first-time homebuyers ends at the end of this month. The number of sales of previously owned homes are now at their highest level in more than two years, reports Alan Zibel for the Associated Press. (More stories on the real estate sector).

• iShares Dow Jones U.S. Home Construction (NYSEArca: ITB)

U.S. manufacturing activity grew at its fastest rate in more than three years in October. The surge was unexpected, although some noted that it’s still improving at a modest pace, reports The Wall Street Journal. Construction spending also rose by 0.8%, although Wall Street expected a decline.

• Industrial Select Sector SPDR (NYSEArca: XLI)

CIT filed for bankruptcy this weekend in a last-ditch effort to keep operating. CIT is a lender to nearly a million small- and mid-size businesses. The lender was also a recipient of $2.3 billion in taxpayer bailout money, which will be wiped out in the bankruptcy, The Wall Street Journal notes. (How to harness the financial sector’s recovery).

Ford surprised Wall Street by announcing $1 billion in net income in the third quarter. The automaker has also forecast a “solidly profitable” 2011. Ford hasn’t posted a full-year profit since 2005, report Tom Krisher and Dee-Ann Durbin for the Associated Press.

Investors this week will be looking at various economic indicators for clues to the strength of the U.S. economy. One of the most anticipated reports is the Labor Department’s October employment report, which is due on Friday. The Federal Reserve is also going to comment on Wednesday after a two-day meeting.

Oil had been above $80 a barrel for much of the morning, but dropped back below that mark as the dollar continued to gain against the euro, report Donna Kardos Yesalavish and Geoffrey Rogow for The Wall Street Journal. PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) is up about 0.5% this morning. (Read our currency report for more on currencies and ETFs).

The market’s dip is also being attributed to analyst downgrades of banks and concerns that Bank of America (NYSE: BAC) will have to sell shares in order to payback bailout money it received from the government, reports Rita Nazareth for Bloomberg. The Financial Select Sector SPDR (NYSEArca: XLF) is down more than 2% this morning.

Verizon Communication (NYSE: VZ) reported this morning that its third-quarter profit fell less than expected, by 9%. Gains in the company’s wireless division helped offset slower-than-expected growth in its FiOS television service, says Sinead Carew for Reuters. Vanguard Telecom Services (NYSEArca: VOX) is down more than 2.5% this morning; Verizon is 20.3%.

For more stories on telecommunications, visit our telecommunications page.

Positive earnings from the tech sector lifted some spirits:

• Amazon (Nasdaq: AMZN) reported a 69% increase in its third-quarter profit, fueling hopes that the holiday season could be a good one for online retailers, reports Geoffrey A. Fowler for The Wall Street Journal.
• Microsoft (Nasdaq: MSFT) reported that cost-cutting helped deliver forecast-beating profits. The software giant also stated that consumer demand was strengthening.

Technology Select Sector SPDR (NYSEArca: XLK) is up 38.6% year-to-date; Microsoft is 9.9%

Existing home sales shot up 9.4% in September, handily beating estimates. It was also the largest monthly gain in 26 years, reports Alan Zibel for the Associated Press. Much of the increase is being attributed to homebuyers scrambling to purchase a home before the government’s tax credit for first-time homebuyers ends. SPDR Dow Jones REIT (NYSEArca: RWR) is up 17.7% year-to-date. (Visit our real estate category for more stories on the housing market.)

Federal Reserve Chairman Ben Bernanke urgedCongress this morning to push through financial reform. The central bank is also taking its own steps  to fix the wounded system, reports Michael S. Derby for The Wall Street Journal.

Meanwhile, the U.S. Treasury and Federal Reserve have unveiled new rules aimed at capping executive pay. While it doesn’t cap pay levels at any specific institution, it still has broad reach, reports Steven Sloan at Insurance Networking. The Fed that 28 large financial institutions to a review of their policies. (For more on the financial sector, visit our financial category).

Assets: $616.7 million

Holdings: IYF holds some of the nation’s largest banks and financial institutions, including JP Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS) and Bank of America (NYSE: BAC).

Objective: IYF tracks the Dow Jones U.S. Financials index.

What You Should Know

• 41.4% of the fund  in banks; 26.9% is in financial services; 13.1% is in non-life insurance; 11.8% is in real estate investment trusts
• The fund as a 0.48% expense ratio
• There are 258 holdings in the ETF
• Since the market’s low on March 9, IYF is up 121%

The Latest News

• Wells Fargo (NYSE: WFC) reported that its profit jumped 61%, but its loan losses also jumped to more than $5 billion. Wells Fargo is simply getting in line with other big banks, which have also reported big losses from loans gone bad, reports the Associated Press.
• Morgan Stanley (NYSE: MS) beat analysts’ expectations by reporting consolidated net revenues of $8.7 billion. The profit ends a three-quarter losing streak, and it can be attributed to Morgan Stanley’s new conservative stance in the wake of the financial collapse, Reuters reports.
• JPMorgan Chase (NYSE: JPM) set a high bar for earnings, but Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C) failed to reach it when they announced their third-quarter results this morning. Goldman Sachs reported $3.19 billion in trading profits that beat expectations, but the stock dropped on declines in investment banking revenues. Citigroup reported a smaller loss than expected, but credit losses are high, report Sara Lepro and Tim Paradis for the Associated Press.
• The rally may not be indefinite, since banks still have their share of problems. But there’s still opportunity there, since financial ETFs are still about 50% off their 2007 highs. (Play the capital markets recovery).

For past ETF Spotlights, visit our ETF Spotlight category.

All eyes are on the troubled financial sector this earnings season as investors look for signs that the system is on the mend:

• Wells Fargo (NYSE: WFC) reported that its profit jumped 61%, but its loan losses also jumped to more than $5 billion. Wells Fargo is simply getting in line with other big banks, which have also reported big losses from loans gone bad, reports the Associated Press.
• Morgan Stanley (NYSE: MS) beat analysts’ expectations by reporting consolidated net revenues of $8.7 billion. The profit ends a three-quarter losing streak, and it can be attributed to Morgan Stanley’s new conservative stance in the wake of the financial collapse, Reuters reports.

Financial Select Sector SPDR (NYSEArca: XLF) is up about 1% this morning; Wells Fargo is 9.3%; Morgan Stanley is 2.8%

The euro has topped $1.50 against the dollar, a key threshold that raises concerns in Europe about what impact the strong currency will have on its recovering economy. European policy makers have been trying to make the euro weaker, but the markets aren’t paying attention, Neil Shah for The Wall Street Journal reports. CurrencyShares Euro Trust (NYSEArca: FXE) is up about 0.5% this morning.

A drop in gasoline inventories and a weakening dollar also contributed to the price of oil jumping close to $80 a barrel this morning. While the data was close to what analysts expected, it also confirmed that refiners have cut back enough that it’s depleted inventories, reports Brian Baskin for The Wall Street Journal. Last week, oil refiners pushed rates up to 81.1% of capacity, slightly higher than the week before. United States Gasoline (NYSEArca: UGA) is up nearly 2% this morning.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

Although many investors shudder at the mention of the word, the financial sector will one day be in favor again. The financial services sector has been a standout, reports Money and Markets on iStock Analyst.

• iShares Dow Jones U.S. Financial Services (NYSEArca: IYG): up 21.6% year-to-date

The rally may not be indefinite, since banks still have their share of problems. But there’s still opportunity there, since financial ETFs are still about 50% off their 2007 highs. (Play the capital markets recovery).

There are about 34 ETFs that track the financial sector, including:

• SPDR Select Sector Financial (NYSEArca: XLF): up 23.7% year-to-date

• iShares Dow Jones U.S. Financial (NYSEArca:  IYF): up 20.5% year-to-date

• Vanguard Financials (NYSEArca: VFH): up 18.8% year-to-date

XLF is focused exclusively on large-cap financial stocks. IYF and VFH own some smaller companies as well, but all three are well-diversified within the financial sector.

Make sure that you are well educated on market trends and follow the trend lines, especially as times are tenuous for financial companies as they work to get their books back in order. We follow the 200-day moving average as both the entry and exit point. This eliminates any emotional interference and keeps losses to a minimum. Read more about trend following in The ETF Trend Following Playbook.

For more stories about the financial sector, visit our financial category.

Bank of America (NYSE: BAC) reported a $1 billion loss for the third quarter. Consumer credit issues canceled out any earnings from investment banking. Bank of America received two bailouts amounting to $45 billion and has yet to start repaying it, reports Joe Rauch for Reuters.

• iShares Dow Jones U.S. Financial Services (NYSEArca: IYG) is down nearly 2.5% so far today; Bank of America is 12.1%

General Electric (NYSE: GE) reported lower profits, but better-than-expected figures overall. The company’s strength in the industrial and media sectors helped offset the woes in its financial division. Third-quarter earnings fell 42%, which is less than what analysts had feared, reports Bob Sechler for The Wall Street Journal.

• WisdomTree Equity Income (NYSEArca: DHS) is down about 1.5% this morning; GE is 8.1%

Industrial production rose more than analysts predicted last month. Production at factories, mines and utilities rose 0.7% in September. This follows gains of 1.2% in August and 0.9% in July, reports Shobahna Chandra for Bloomberg.

Consumer sentiment is down, however. The index tracking how consumers are feeling fell to 69.4 from 73.5 last month.

Yesterday, JPMorgan Chase (NYSE: JPM) set a high bar for earnings, but Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C) failed to reach it when they announced their third-quarter results this morning. Goldman Sachs reported $3.19 billion in trading profits that beat expectations, but the stock dropped on declines in investment banking revenues. Citigroup reported a smaller loss than expected, but credit losses are high, report Sara Lepro and Tim Paradis for the Associated Press.

• Financial Select Sector SPDR (NYSEArca: XLF) is down about 1.25% this morning

Two positive signs for the U.S. economy emerged this morning: new jobless claims made a surprise drop to 514,000 and inflation stayed low in September. (How to play inflation, deflation and stagflation with ETFs).

The drop in the number of newly laid-off workers isn’t enough to signal that companies are in hiring mode, but it’s a sign that they’re at least slashing fewer workers, reports Christopher S. Rugaber for the Associated Press. It’s the fifth decline in six weeks.

Consumer prices rose 0.2% in September, which was in line with what analysts expected. Excluding energy and food, prices still rose 0.2%. (Read about the holiday retail sales outlook here).

Oil shot above $76 a barrel as the U.S. Dollar continues to weaken. The spike came after a report showed that fuel inventories declined by 5.2 million barrels. A drop of 700,000 had been anticipated. (Where gas prices may be headed).

• PowerShares DB Oil (NYSEArca: DBO) is up nearly 2.5% this morning

Read more about oil by visiting our oil category.